Archives: Quiz

The company financed the equipment purchase with a bank loan. Interest of $3,000 was paid on the loan during 2013. A construction company purchased a piece of equipment with a price of $100,000 on March 1, 2013. The amounts are […]

The profitability of the company based upon the Internal Revenue Code. Provided is a list of important users of accounting information. Also provided are descriptions of a major need for accounting information that may be experienced by the various users. […]

The worksheet facilitates preparation of all of the following financial statements except: a. Cash Flow Statement c. Retained Earnings Statement b. Balance Sheet d. Income Statement When using the direct method to determine operating cash flows, how is the purchase […]

A company forgot to record four adjustments during 2013. Which one of the following omissions of adjustments will understate assets? a. Unearned revenue is not reduced for the portion that has been earned b. Interest on monies loaned out has […]

Issuing common stock to investors Several transactions are listed. Use the choices to identify the effect on the accounting equation for each transaction listed. (Choices may be used more than once.) a. Assets and liabilities increase b. Assets and contributed […]

Patents Several items from the financial statements of Fireside Tires are listed. Use the following choices to identify the type of account for each item listed. (Choices may be used more than once.) a. Assets b. Liabilities c. Revenues d. […]

Good Time Carts offers a one-year warranty on all its golf carts. Estimates suggest that two percent of carts sold will require warranty service and that the average warranty claim will cost $215. During 2013, the company sold 450 golf […]

Rent paid in advance Match the most probable matching method to the costs listed. (Choices may be used more than once.) a. Directly match a specific revenue b. Indirectly match with the period during which it will provide revenue c. […]

Provides several pieces of information needed to prepare the cash flow statement. Match these terms with their correct definition. a. Cash flow adequacy ratio b. Cash flows from financing activities c. Cash flows from investing activities d. Cash flow from […]

Eric is considering buying a car. He can either purchase the car outright or make 5 annual payments of $10,000 at the end of each year. If the interest rate is 7%, how much is the outright purchase price? a. […]

Refer to A Better Mousetrap. What amount should the company recognize as interest revenue on the maturity date of the note? A Better Mousetrap The company sold merchandise to a customer on December 1, 2013, for $100,000. The customer paid […]

The receiving department compares the quantity of merchandise received with the quantity ordered. The following set of items describes activities completed by a company in purchasing and paying for merchandise and in collecting cash for merchandise sales. For each activity, […]

Interest earned on the checking account for May The accountant for a local manufacturing company is reconciling the company’s bank account for May. For each item listed, state how it would be handled on a bank reconciliation. (Choices may be […]

The prospects for future dividend payments. Provided is a list of important users of accounting information. Also provided are descriptions of a major need for accounting information that may be experienced by the various users. Identify the one user group […]

Select the correct statement from the following: a. Consolidation worksheet adjustments are not entered on the accounting records of either Parent or Sub. b. Consolidation worksheet adjustments are entered on the accounting records of the Parent but not the Sub. […]

A mailroom employee opens the mail, counts the money received, and updates the accounting records for the amount received. The following set of items describes activities completed by a company in purchasing and paying for merchandise and in collecting cash […]

Refer to Lanthier’s Heating & Air. What is the maximum amount that can be reported on the balance sheet for common stock and preferred stock, respectively, if all of the stock is issued? Lanthier’s Heating & Air This company began […]

Which of the following statements regarding contingent liabilities is true? a. If they are probable and estimable, then they must be recorded even before the outcome of the future event. b. If they are probable and estimable, then they should […]

This method is used in situations where technological advances are rapid. Given the following list of methods of depreciation, select the method that is best for the situation or purpose given. (Choices may be used more than once.) a. Straight-line […]

Refer to Happy Heights Country Club. On which date did the country club collect golf lessons revenue in advance? Happy Heights Country Club Selected accounts at July 31 are provided below: a. July 2nd b. July 3rd c. July 5th […]

Many stockholders choose to invest in preferred stock because a. preferred stock can always be converted into common stock at the stockholder’s option. b. the preferred dividend distributions are generally increased each year. c. dividends are distributed to preferred stockholders […]

Tom is saving for an engagement ring. If he deposits $500 payments into an account (one at the end of each year) that earns 6% interest compounded annually, how much will he have saved by the end of the 10thyear? […]

Refer to Rio Imports. The debt-to-equity ratio for 2015 is Rio Imports Information from the financial statements are provided below: a. an indicator that the company’s ability to meet current interest payments to creditors is increasing. b. increasing slightly from […]

The relationship between dividends and the market price of a company’s stock. Select the ratio that each definition most properly satisfies. a. Dividend yield ratio b. Operating cash flow ratio c. Debt-to-total assets ratio d. Return on common equity ratio […]

A company reported the following information: How much cash was paid for insurance during 2014? a. $22,700 b. $27,700 c. $39,200 d. $36,700 Used to encourage prompt payment Select the term that matches each of the following descriptions. a. Sales […]

Generally accepted accounting principles (GAAP) require that research and development costs to develop a new product be a. capitalized in the patents account. b. expensed in the period incurred. c. capitalized in the research and development costs account. d. amortized […]

A local tennis club sells season memberships for $1,000 each. During January 2013, 50 season memberships were sold. As of March 31, 2013, only $25,000 of season membership fees had been collected from customers. The tennis season runs for 6 […]

Depreciation expense Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.) a. Balance Sheet-Property, Plant, and Equipment b. Balance Sheet-Intangible Assets c. Balance Sheet-Current Assets d. Balance Sheet-Other […]

Refer to Abundant Returns. Assume that the company estimates bad debts using the aging method. The aging schedule indicates that $11,500 of the end of the year Accounts Receivable will be uncollected. Abundant Returns This company sells its merchandise only […]

All of the following are true for a company that uses the allowance method of accounting for bad debts, EXCEPT: a. It uses a contra-asset account called the allowance for doubtful accounts. b. It records bad debt expense each time […]

What will be the increase in the Paid-in capital in excess of par account if a corporation issues 20,000 shares of $1.00 par common stock for $6 per share? a. $140,000 b. $120,000 c. $100,000 d. $20,000 Hunsinger Enterprises purchases […]

Which pair of accounts has the same set of rules for debit and credit entries? a. common stock and accounts payable b. salary expense and retained earnings c. cash and notes payable d. sales revenue and accounts receivable Cost of […]

Refer to Art Shoes. How much interest revenue will the company recognize for the year ended December 31, 2013? Art Shoes This company received a promissory note from a customer on July 1, 2013. The face amount of the note […]

When using the indirect method to determine operating cash flows, how is the receipt of cash from the sale of long-term investments treated on the statement of cash flows? a. operating activity b. investing activity c. financing activity d. noncash […]

Prices are declining; income taxes are higher with this method. Identify which inventory costing method achieves the effect listed in the following items. (Choices may be used more than once.) a. FIFO method c. Average cost method b. LIFO method […]

A way to estimate bad debts. Match each statement to the item listed below a. Accounts receivable e. Notes receivable b. Aging method f. Realized c. Allowance for Doubtful Accounts g. Securitization d. Earned Mathematical extensions and footings on purchase […]

Debt-to-equity ratio Indicate the type of each ratio listed. (Choices may be used more than once.) a. Liquidity ratio b. Debt management ratio c. Asset efficiency ratio d. Profitability ratio e. Stockholder ratio Which of the following underlying assumptions for […]

A customer returned damaged goods for credit. Under a perpetual system, which of the seller’s accounts decreases? a. purchase returns b. accounts receivable c. sales returns d. sales revenue Flossil Fossils Company purchased a tract of land containing coal in […]

The practice of adjusting the market value of securities that are accounted for using the fair value method is referred to as a. consolidation. b. marking-to-market. c. passive investing. d. segregation of investments. Storage facility used for storing inventory goods […]

Refer to A&B Foods. If the company uses the aging of accounts receivable method to estimate its bad debts, what amount will be reported as bad debt expense for 2013? A&B Foods Data for the year ended December 31, 2013, […]

In anticipation of preparing the July bank reconciliation, the accountant gathered the following information: What is the company’s adjusted cash balance at July 31st? a. $4,300 b. $4,050 c. $4,140 d. $4,500 Device that facilitates combining the financial statements of […]

Resold treasury stock for cash. Use the following codes to indicate how the cash flow effect, if any, of each transaction or event would be reported on a statement of cash flows if the operating activities section is prepared using […]

Prices are rising; profits are higher under this method. Identify which inventory costing method achieves the effect listed in the following items. (Choices may be used more than once.) a. FIFO method c. Average cost method b. LIFO method d. […]

Tail Winds Corporation acquired the following equity securities during 2013: The company’s investment in these two companies is passive and classified as available-for-sale. During 2013, TICO paid a dividend of $1.10 per share and Thankful paid a dividend of $1.75 […]

A marine company pays its sales personnel 6% commission of the selling price of each yacht. During November 2013, yacht sales totaled $20,400,000. During December 2013, sales totaled $25,100,000. Because its policy is to pay commissions only in the month […]

The buyer must pay the shipping costs. Match the terms with the descriptions related to merchandise sales and purchases. a. Transportation-in e. Cost of goods available for sale b. Perpetual inventory system f. Periodic inventory system c. Net purchases g. […]

A decrease in the par value of a class of stock brought about by the exchange of original shares for a greater number of new shares. Match the terms to the definitions. If a corporation repurchases 500 shares of its […]

Dividend payout ratio Indicate the type of each ratio listed. (Choices may be used more than once.) a. Liquidity ratio b. Debt management ratio c. Asset efficiency ratio d. Profitability ratio e. Stockholder ratio Keystone Corporation’s balance sheet showed the […]

Average stockholders’ equity Select the ratio that would include each amount or account in its calculation. (Choices may be used more than once.) a. Times interest earned ratio b. Operating cash flow ratio c. Debt-to-equity ratio d. Return on equity […]

A customer’s check for $25 that had been deposited into the company’s checking account the previous month was returned stamped “NSF” by the bank. Which of the following journal entries is required? a. Cash 25 Accounts Receivable 25 b. Cash […]